The National Federation of Independent Business has released its 10th Small Business Problems and Priorities report, ranking issues in order of concern for Main Street and mom-and-pop enterprises.
California was among four states that were segmented for closer review in NFIB’s report, along with New York, Ohio and Texas.
Overall, California's small business owners are less concerned with poor earnings and highly variable earnings, with only 10% finding poor earnings to be a critical problem and only 6% finding variable earnings to be of concern. However, NFIB California State Director John Kabateck noted that the survey was assessed before COVID-19 emerged in mid-March 2020.
NFIB California State Director John Kabateck
| File photo
“We're clearly seeing small businesses in California challenged on almost every level,” he said. “There was a slight uptick where we saw businesses being able to reopen and more owners were becoming confident enough to hire people back. But then Gov. Gavin Newsom dimmed the switch again and I wouldn’t be surprised if we see those numbers dip.”
Out of 40.1 million who live in California, 621,562 coronavirus cases were reported along with 11,224 deaths as of Aug. 16, according to California’s COVID-19 dashboard.
Among the most burdensome problems for California small business owners are the following:
Zoning land-use regulations
According to the report, 15% of small business owners in California found zoning land-use regulations to be a critical problem.
“The cost of property and the cost of land in California are still very challenging,” Kabateck told the Southern California Record. “We hear from a number of businesses that are burdened and saddled with regulations, such as the California Environmental Quality Act (CEQA), while the California Coastal Commission is still very onerous with their zoning laws that overreach and are so over the top when it comes to environmental regulations that developers can't even make the most modest changes.”
Unreasonable government regulation
Compared to 19% nationwide, 35% of California small business owners find unreasonable government regulation to be a critical problem.
“People can't build businesses, homes or residences,” said Kabateck. “They're being strangled out of the ability to even make reasonable moves in that direction and often are faced with frivolous lawsuits.”
Workers' compensation
Workers' compensation ranked as the 10th most burdensome problem overall for California small businesses, with 22% of owners identifying it as critical. Nationally, workers' comp was the 22nd most burdensome issue.
“Workers' comp is still extremely expensive,” Kabateck said. “Even with the great reforms, bipartisan reforms, achieved in the early 2000s, we hear from a lot of small business owners that they are saddled with higher workers' compensation costs and no eligibility requirements. It's not just the workers' comp costs and provisions but also the fear of liability. We have been working vigorously to gain liability reform for small businesses.”
Welcome to SOHO
On the upside, small business owners based in California are less burdened by controlling their own time, cost of supplies/inventory, cash flow, competition from large businesses, telephone costs and services, uncertainty over economic conditions, using the computer and Internet as well as pricing goods and services.
“There's very much a possibility that a lot of owners are becoming individual at-home businesses, especially in this new normal,” Kabateck said. “They are becoming micro-businesses if they're even able to survive. That’s what we call ‘single-owned home operators’ or SOHOs. We may very well find that some of those costs have been pared back or there's lesser concern for those costs because many owners are giving up the four walls of a jewelry store or a bookstore, for example, and becoming consultants or working from home. In this crisis we're going to see more and more of it.”